Page 369 - Orlicky's Material Requirements Planning

348 PART 3 Managing with the MRP System

scenario planning; uncertainty goes with the turf. Emphasis is strongly on strategic mar-
keting, new-activity success, pipeline fill, minimizing obsolescence, and portfolio man-
agement. High levels of customer service and supply-chain responsiveness are expected,
although there is forecast uncertainty. Primary targets include new products as a percent
of profit, new-product/time to profit and profit by brand/segment, brand health, and
market share.
Getting clarity in strategic intent is important before embarking on an S&OP imple-
mentation or reimplementation. Without this clarity, an S&OP implementation embarks
on a one-size-fits-all approach; here, by default, the assumption is that operational excel-
lence is a strategy. If the one-size-fits-all approach is followed for businesses using the
strategy of customer relationships, product/service differentiation, there will be no
enthusiasm from marketing, sales, finance, or business management. These key partici-
pants resent spending valuable time in a process that spends several hours in a month
focused on volume and cost implications, one set of numbers for supply, and a set of mea-
sures that mainly interest the supply chain and only one measure (customer service) of
interest to sales, and little to offer marketing.

Different Portfolio Models and Their Impact on S&OP
How different the future will be from the past and present is important in understanding
the business issues that connect to the S&OP process—S&OP is all about managing
change and its consequences! Figure 20-11 shows five different portfolio models with
their different emphases on S&OP.
From models 1 through 5 we go from a future devoid of new activity to one with a
high degree of new-product introduction; in fact, in model 5, the new-activity impetus is
coming from products that are new to the world.
An S&OP process in portfolio model 1 would be traditional, and since there is no
new activity in the next five years, demand and supply balancing would be the empha-
sis in S&OP. Because forecasting standard products in markets that are not growing is rel-

FIGURE 20-11
2 4 New to the World
Five portfolio New to Us New to Us
Line Extension and Promos Line Ext &Promos
models.
Existing Portfolio Existing Portfolio
3 New to Us
0 2 Years 4 Years 0 2 Years 4 Years
Line Extension and Promos
Existing Portfolio
0 2 Years 4 Years
1 5
New to the World
Line Extension and Promos
Existing
Existing Portfolio New to Us
Portfolio
0 2 Years 4 Years 0 2 Years 4 Years